Question

Question: List the variable overhead variances, and briefly describe each

Short answer

Answer

The variable overhead variances can be in the form of variable overhead cost varianceand variable overhead efficiency variance.

Step-by-step solution

Definition of the variable overhead

Variable overhead is the cost incurred by the company for operating the business, which changes with the change in production and sales.

Variable overhead variances

The Variable overhead variances are as follows:

1. Variable overhead cost variance: The variable overhead cost variance measures how well the company keeps the variable overhead cost per unit within the standards.
2. Variable Overhead Efficiency Variance: The variable overhead efficiency variance shows how well the company uses the allocation base for the variable overhead within the standard.